Schoor v. Holmdel Heights Construction Co.

Decided: July 14, 1975.

HOWARD M. SCHOOR, ASSOCIATES, INC., A CORPORATION OF THE STATE OF NEW JERSEY, AND SCHOOR ENGINEERING, INC., A CORPORATION OF THE STATE OF NEW JERSEY, APPELLANTS,v.HOLMDEL HEIGHTS CONSTRUCTION COMPANY, A CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANT, AND ALLAN (ALAN) SUGARMAN, RESPONDENT

For reversal -- Justices Mountain, Sullivan, Pashman, Clifford and Schreiber and Judge Conford. For affirmance -- None. The opinion of the Court was delivered by Mountain, J.

Mountain

[68 NJ Page 97] Plaintiffs, two engineering and surveying firms with identical or very similar management and ownership, brought this action to recover amounts due for professional services rendered by them to defendant, Holmdel Heights Construction Company. The latter is in receivership

and the suit has proceeded, in effect, solely against defendant, Alan Sugarman. Plaintiffs' claim is that Sugarman, an attorney at law of this state, personally undertook to pay for the services rendered. He defends on the factual ground that he made no promise to do so and upon the legal ground that even had he made such a promise, it would be unenforceable under the Statute of Frauds.

The trial judge, sitting without a jury, resolved both the factual and legal issues in favor of plaintiffs and entered judgment against defendant in the amount of $24,105.30, together with interest. On appeal to the Appellate Division the judgment was reversed, with one judge dissenting. Plaintiffs have appealed to this Court as a matter of right. R. 2:2-1(a) (2).

Holmdel Heights Construction Company was in the process of developing a tract of land upon which it was constructing homes. Defendant, Sugarman, owned slightly more than 18% of the capital stock of this corporation and at all relevant times acted as its attorney. Plaintiff corporations were engaged to do surveying, engineering and professional planning work in connection with the development. The amount of their fees was not fixed by agreement but there has never been any dispute as to the reasonableness of their charges. Some of the invoices they submitted to the developer were paid, but others were not. The total of these unpaid charges continued to increase and plaintiffs became concerned.

On April 14, 1970 an important conference took place in the office of Mr. Sugarman. In addition to Mr. Sugarman there were also present at this meeting Howard M. Schoor, president of the plaintiff corporations, and Lawrence Schwartz, Esq., their attorney. The question of plaintiff's unpaid bills was a principal subject of discussion. Both Mr. Schoor and Mr. Schwartz testified that at this meeting Mr. Sugarman agreed personally to pay all outstanding bills as well as any charges that might be incurred in the future, if plaintiff would continue with the work they were doing. The developer, Holmdel Heights Construction Company,

was then busily engaged in seeking additional financing. Everyone concedes that in order to secure this financing, it was essential that further engineering work be done at once. Mr. Sugarman drew a check on his trust account for $2,000 and gave it to Mr. Schoor. According to the latter, the delivery of the check was accompanied by a statement made by Mr. Sugarman that this was intended to show his good faith in giving his personal guaranty as to payment of the outstanding and continuing obligation. On redirect examination Mr. Schoor again stated,

At the April 14th meeting Mr. Sugarman very pointedly said that the corporation had no money at this time and was giving me his own money to attempt to satisfy me and have us continue to work on the project.

The testimony of Mr. Schwartz was substantially the same.

Defendant disagreed as to the purport of the conversation. His recollection was that after indicating the corporation's lack of liquidity, he gave Schoor the check for $2,000, indicating that that was the best the corporation could do at that time and that as further funds were received by it, additional payments would be made. At about this period Sugarman seems to have been actively managing many of the corporation's financial affairs; large amounts of corporate funds passed through his trust account.

Schoor and Schwartz left the meeting apparently satisfied, and the needed engineering work went forward. On June 12, 1970, Sugarman wrote a letter to Schoor enclosing a further check in the sum of $1,000. The letter stated,

I have enclosed to your order a check in the sum of $1,000.00. The Corporation does not have this money. This is my money being submitted to you in good faith because I promised it to you last week. I certainly hope you don't let us down.

The letter also contained a detailed specification of further engineering work that was needed at once in connection with the proposed new financing. Plaintiffs appear to have done

all the work requested, but received no further payment. Shortly thereafter Holmdel Heights Construction Company went into ...

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